I o, Tadashi
A icle
T ump a i s and oundabou ade
KDI Jou nal o Economic Policy
P o ided in Coope a ion wi h:
Ko ea De elopmen Ins i u e (KDI), Sejong
Sugges ed Ci a ion: I o, Tadashi (2024) : T ump a i s and oundabou ade, KDI Jou nal o Economic
Policy, ISSN 2586-4130, Ko ea De elopmen Ins i u e (KDI), Sejong, Vol. 46, Iss. 3, pp. 25-47,
h ps://doi.o g/10.23895/KDIJEP.2024.46.3.25
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KDI Jou nal o Economic Policy 2024, 46(3):25-47
h ps://dx.doi.o g/10.23895/kdijep.2024.46.3.25
25
T ump Ta i s and Roundabou T ade†
By TADASHI ITO*
Al hough he e a e many news a icles o a i dodging ia he e-
ou ing o made-in-China goods h ough hi d coun ies, elabeling
hese goods as made in Mexico o made in Vie nam, he e ha e been
no scien i ic s udies on his issue. This pape p o ides s a is ical
e idence ega ding whe he such p ac ices a e aking place. Using
mon hly ade s a is ics a he mos disagg ega ed le el and analyzing
da a up o 2019, he yea be o e he COVID-19 shock, li le e idence
o oundabou ade is ound. Wi h an ex ended da ase up o 2023,
o e all he e is li le sign o oundabou ade, al hough some sligh
signs o oundabou ade a e ound o Mexico and Vie nam.
Keywo ds: T ump Ta i s, Roundabou T ade
JEL Code: F14
* Tadashi ITO: Facul y o In e na ional Social Sciences, Gakushuin Uni e si y, Tokyo, Japan. (E-mail:
adashi.i oATgakushuin.ac.jp)
* Recei ed: 2024. 6. 10
* Re e ee P ocess S a ed: 2024. 6. 19
* Re e ee Repo s Comple ed: 2024. 8. 1
† This esea ch was conduc ed as a pa o a p ojec by he Economic Resea ch Ins i u e o ASEAN and Eas
Asia (ERIA) en i led ‘The Rise o Global Economic Unce ain y and Fi m Beha iou ’. Pa o he wo k in his pape
was inancially suppo ed by he Japan Socie y o he P omo ion o Science KAKENHI (G an numbe 20H01501,
22H00063). The au ho app ecia es he excellen esea ch assis ance o Takahide Aoyagi. The au ho is also deeply
indeb ed o he membe s o his p ojec o hei in aluable sugges ions. The opinions exp essed in his pape a e
solely hose o he au ho and do no e lec he iews o ERIA.
26 KDI Jou nal o Economic Policy AUGUST 2024
I. In oduc ion
I is wi hou doub ha one o he la ges unexpec ed shocks in in e na ional ade
o e he pas 20–30 yea s was he launch o a ade wa agains China by o me
Uni ed S a es (US) P esiden Donald T ump. Many academic pape s ha e shown ha
T ump’s a i s subs an ially educed Chinese expo s o he US. On he o he hand,
some epo s sugges ha a ul dodging o he T ump a i s ook place h ough, as
one example, a s a egy known as oundabou ade, o de ou ade.1 When goods
a e expo ed o inal des ina ion coun ies ia hi d coun ies o ci cum en expo
emba gos on he des ina ion coun ies o o a oid high impo a i s imposed by he
inal des ina ion coun ies, such expo s a e e e ed o as oundabou o de ou ade.
Many news a icles2 ha e sugges ed ha Chinese goods na iga ed al e na e ade
ou es o he US; in o he wo ds, expo e s used hi d coun ies o bypass he T ump
a i s. Howe e , hese news a icles a e sho o ha d e idence suppo ed by obus
scien i ic analysis. This s udy will in es iga e his issue h ough scien i ic me hods,
in ending o in es iga e whe he o no oundabou ade is p e alen , i.e., i he e a e
gene al signs o oundabou ade o many coun ies, a he han examining
pa icula cases o oundabou ade. To his end, mon hly ade da a a he highly
disagg ega ed p oduc le el is used, as such da a a e a ailable o many coun ies o
he app op ia e pe iod o in es iga e he issue. Admi edly, o iden i y oundabou
ade p ecisely, i m-le el expo /impo da a a e needed, bu hese da a a e a ailable
only unde s ic condi ions o use and only o ce ain coun ies. Mo eo e , his
in o ma ion is ypically una ailable o ecen yea s.
As shown in Table 1, T ump’s a i s agains China co e ed a wide ange o
p oduc s. Mo e han 60% o HS 8-digi p oduc lines we e a ge ed by he T ump
adminis a ion wi h a subs an ial impo du y a e o 25%. Thus, he e ec s o
T ump’s a i s on US-China ade and he subsequen impac on wo ld ade ha e
been a ho subjec in es iga ed by many ade economis s o e he pas ew yea s.
Many academic pape s show a subs an ial dec ease in Chinese expo s o T ump-
a ge ed goods o he US. Some s udies show ha se e al o he US pa ne coun ies
inc eased hei expo s o he US a he expense o China. On he o he hand, some
s udies sugges ha China appea s o ha e inc eased i s expo s o o he coun ies
e en mo e han i educed i s expo s o he US. Speci ically, i seems ha China in
ac expanded i s expo s o T ump- a ge ed goods o he wo ld (I o, 2022a). One
po en ial explana ion is ha China may ha e genuinely inc eased i s expo s o hi d
coun ies h ough policy changes by he Chinese go e nmen , such as he expo VAT
e und. Ano he po en ial explana ion is a i dodging, as men ioned abo e. This
s udy in es iga es a i dodging h ough oundabou ade, as i has cap u ed much
a en ion om he media and he public.
1This pape uses he e ms ‘ oundabou ade’ and ‘de ou ade’ in e changeably.
2See, o example, h ps://asia.nikkei.com/Spo ligh /Da awa ch/Chinese-goods-na iga e-al e na e- ade- ou es- o-
US-sho es o h ps://edi ion.cnn.com/2022/12/02/poli ics/china-sola - a i -in es iga ion-clima e/index.h ml.
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 27
TABLE 1—OVERVIEW OF TRUMP TARIFFS
Lis 1 Lis 2 Lis 3
Da e o he execu i e o de s being
e ec i e
6 June 2018 23 July 2018
1s : 24 Sep embe 2018
2nd: 10 May 2019
The pu pose o he ade ac
China's laws, poli ics, p ac ices o ac ions may be un easonable o
disc imina o y and may be ha ming Ame ican in ellec ual p ope y
(IP) igh s, inno a ion, o echnology de elopmen .
Rele an U.S. domes ic law Sec ion 301 o he T ade Ac o 1974
The numbe o a ge ed i ems* 818 279 5745
Ad alo em du ies 25% 25% 1s :10%
2nd:25%
The cha ac e is ics o a ge ed i ems*
High alue-added
p oduc s (indus ial
equipmen s)
Indus ial p oduc s
e.g. (plas ics,
semiconduc o s,
ailway pa s)
Consume p oduc s
e.g. (home appliances,
chemical p oduc s,
ex ile p oduc s)
No e: Ta ge ed goods a e de ined a HS 8-digi . The o al numbe o HS 8-digi goods is 11300. Sou ce: Au ho 's
elabo a ion om he (USTC)'s o icial announcemen . See he e e ence o he URL.
A. Li e a u e
P e ious s udies ocusing on his opic, al hough no necessa ily exhaus i e, ound
mos ly nega i e impac s o T ump’s a i s on he US economy. Using di e ence-in-
di e ence es ima ions, Ami i, Redding, and Weins ein (2019) and Ami i, Redding,
and Weins ein (2020) showed subs an ially nega i e e ec s o T ump’s a i s on
Chinese expo s o he US. Mo e speci ically, he US a i s a e almos en i ely bo ne
by US i ms and consume s (no e ms o ade e ec ). A subs an ial edi ec ion in
ade in esponse o he 2018 a i s ook place. A 10% a i is associa ed wi h
app oxima ely a 10% d op in impo s o he i s h ee mon hs, bu his elas ici y
doubles in magni ude in subsequen mon hs. Ami i, Redding, and Weins ein (2019)
showed ha he cumula i e deadweigh wel a e cos ( educ ion in eal income) om
he US a i s was a ound $8.2 billion in 2018. In an e en s udy es ima ion,
Fajgelbaum e al. (2020) showed ha he US impo alues o T ump-lis ed goods
om a ge ed coun ies dec eased by 31.7%, whe eas he US o al impo alues o
T ump-lis ed goods, i espec i e o he impo pa ne coun y ( ega dless o whe he
he impo pa ne s we e subjec o he T ump a i s o no ) dec eased by 2.5%. US
i ms and consume s who bough T ump-lis ed impo ed goods su e ed US$51
illion in eal income losses, equi alen o 0.27% o US g oss domes ic p oduc
(GDP). The sum o his loss o US i ms and consume s plus he inc ease in
consume su plus (due o a sligh dec ease in he bo de p ice) and a i e enues
esul ed in a loss o US$7.2 illion, equi alen o 0.04% o US GDP. S udying he
a i pass- h ough a he le els o US e aile s and consume s, Ca allo e al. (2021)
also showed indings simila o hose by he s udies abo e, mos no ably he
comple e pass- h ough o he T ump a i s o US domes ic p ices. Fo consume
goods such as washing machines, handbags, and e ige a o s, hey ound ha he
a i bu den ell comple ely on e aile s, no consume s, as hey ound ha he e ail
p ices o hese goods did no change.
T ump’s a i s agains China had disce nible impac s on he Chinese economy.
Cho and Li (2021), using sa elli e eadings o nigh - ime luminosi y, showed ha
28 KDI Jou nal o Economic Policy AUGUST 2024
loca ions wi hin China ha we e mo e exposed o he US a i s expe ienced a g ea e
dec ease in nigh ligh in ensi y, poin ing o con ac ed local economic ac i i y. Cui
and Li (2021) showed ha he US impo a i hikes we e associa ed wi h ela i e
educ ions in Chinese new i m en y a es. He, Mau, and Xu (2021) ound ha i ms
ha we e ela i ely mo e exposed o US a i s in 2019 esponded by pos ing ewe
job ad e isemen s in he six mon hs ollowing he a i inc ease. The educ ion
amoun ed o 2.4%–3.2% ewe ad e isemen s on a e age pe i m.
T ump’s a i s agains China a ec ed hi d coun ies as well. Using in o ma ion
a he a i -line le el on sanc ions and e alia ions and encapsula ing his in o ma ion
in a gene al equilib ium amewo k ea u ing impe ec compe i ion, ecu si e
dynamics, and global alue chains (MIRAGE-e V2), Bello a and Fon agné (2020)
ound ha , consis en wi h poli ical economy de e minan s, hese wis s o alue
added we e ansmi ed o p oduc ion ac o s, leading o sizeable c ea ion and
des uc ion o jobs and he ealloca ion o capi al o he bene i o p o ec ed sec o s,
mos ly a he expense o hei clien s. Rega ding he e ec s on he ac i i ies o
Japanese i ms, Sun e al. (2019) using in o ma ion on he ac i i ies o Japanese
mul ina ionals in China, showed ha Chinese a ilia es, especially hose wi h high
exposu e o ade wi h No h Ame ica, in gene al saw a decline in sales a e he ade
wa began. I o (2022a) ound ha T ump’s a i s agains China subs an ially
dec eased US impo s om China, whe eas many US impo pa ne coun ies
inc eased hei expo s o he US a he expense o China, in a kind o ade di e sion
e ec . The s udy also ound ha whils he e was no sign o a dec ease in bo de
p ices o US impo s om China (no e ms o a ade imp o emen ), US impo s
om o he pa ne coun ies o T ump-lis ed goods ( a ge ing China) showed a
dec ease in hei bo de p ice. I o (2022b) showed ha he e was no inc ease in
Japan’s impo alues/quan i ies o T ump- a ge ed goods om China, inding
howe e ha he impo p ice dec eased sligh ly. Su p isingly and con a y o a p io i
expec a ions, i was also ound ha Japanese indus ies ha a e linked as ups eam
indus ies o China’s (downs eam) indus ies subjec ed o T ump’s a i s inc eased
hei expo s o China. To in es iga e he eason o his unexpec ed esul , he
analysis ocused on China’s expo s o T ump a i - a ge ed goods o he wo ld and
ound ha China inc eased i s expo s o hose goods o he wo ld. Speci ically, he
inc ease in China’s expo s o coun ies o he han he US mo e han o se he
dec ease in i s expo s o he US. On he o he hand, somewha con a y o I o’s
(2022b) inding, Hayakawa e al. (2022) a gued ha he dec ease in China’s ou pu
expo s o he US caused by he T ump a i s educed China’s inpu impo s om
supplie economies, especially om Taiwan.
Ta i dodging by ade h ough hi d coun ies may explain he abo e-men ioned
seemingly inc easing expo s o T ump- a i goods om China o coun ies o he
han he US. This s udy in es iga es whe he he e is e idence o such oundabou
ade using la ge and de ailed ade s a is ics. Iyoha e al. (2024) p esen ed he same
esea ch ques ion in hei s udy. Using Vie namese cus oms da a a he i m le el,
hey showed ha 16.1% o Vie namese expo s o he US we e iden i ied as ha ing
gone h ough p oduc -le el e ou ing, whe eas only 1.8% we e lagged as ha ing
been h ough i m-le el e ou ing. This s udy di e s om he wo k o Iyoha e al.
(2024) in he ollowing ways. Fi s , he p esen s udy examines e idence o
oundabou ade no only o Vie nam bu also o nea ly all po en ial e ou ing
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 29
coun ies. Second, i uses a di e en de ini ion o oundabou ade. Iyoha e al.
(2024) de ines ade as oundabou ade when he same HS 8-digi p oduc s a e
impo ed o Vie nam and expo ed o he US. This de ini ion is oo loose because i
is well known ha he e is subs an ial wo-way ade e en among he same HS 8-
digi p oduc s, mainly owing o p oduc a ie ies and e ical in a-indus y ade.
Unlike Iyoha e al. (2024), his s udy con ols o in a-indus y ade and hus mo e
p ecisely de ines oundabou ade. The de ini ion o oundabou ade employed in
his s udy is desc ibed in he ollowing sec ion. Gi en he lack o i m-le el expo
and impo da a o many coun ies ha could be in ol ed in oundabou ade, his
s udy a emp s o in es iga e he issue by using expo and impo da a a he mos
de ailed p oduc le el.
II. Da a and me hodologies
A. De ini ion o oundabou ade
As men ioned in he in oduc ion sec ion, when goods a e expo ed o inal
des ina ion coun ies ia hi d coun ies o ci cum en expo emba gos on he
des ina ion coun ies o o a oid high impo a i s imposed by he inal des ina ion
coun ies, such expo s a e e med oundabou ade o de ou ade. The e can be
many ways in which oundabou ade is accomplished. Fo example, a Chinese i m
can se up i s a ilia e ( o eign di ec in es men ) in, o ins ance, Vie nam, impo
goods om he headqua e s in China, and e-expo hem o he US. O , a i m in a
bypass coun y, such as Vie nam, can impo goods om China and hen e-expo
hem o he US. In he la e case, he Vie namese i m in he middle is he one ha
engages in oundabou ade. The Chinese i m ha expo ed he goods o he
Vie namese i m is unawa e o he e-expo ing om Vie nam. When goods a e
expo ed h ough hi d coun ies ha ha e ee ade ag eemen s (FTAs) wi h he US,
such as Canada o Mexico, FTA a i a es may o may no be applied. When US
impo e s apply o ce ain FTA a i a es, hey need o show wha is known as a
ules o o igin ce i ica e. Howe e , legi ima ely elabeling ‘made in China’ o ‘made
in Mexico’ and hus making he goods eligible o FTA a i s incu s a ela i ely high
cos because Mexican i ms in he middle mus engage in some p ocessing o he
p oduc s. On he o he hand, he bene i s gained by he use o FTA a es a e ela i ely
small because he gap be ween he mos a o ed na ion (MFN) a es and FTA a es
is no subs an ial, usually only a ew pe cen , such as an MFN a e o 3% and an FTA
a e o 0%. As he T ump a i s we e mos ly 25%, he bene i gained by oundabou
ade changed li le be ween MFN impo s and FTA impo s. Gi en his cos -bene i
pe spec i e, many i ms mos likely did no ha e much incen i e o apply o use FTA
a es. As men ioned in he in oduc ion sec ion, wi h ade da a only, i is impossible
p ecisely o iden i y oundabou ade. Ins ead, his pape aims o deduce whe he
he e a e gene al signs o oundabou ade by s udying he unusually apid inc ease
o impo s om China and he simul aneously apid inc ease o expo s o he US o
T ump a i goods compa ed o non-T ump a i goods.
30 KDI Jou nal o Economic Policy AUGUST 2024
B. Da a sou ce
To in es iga e his issue, we use mon hly ade da a a he Ha monized Sys em
(HS) 6-digi le el aken om he Global T ade A las. Gi en he ex emely la ge
sample size, which eaches ens o millions o obse a ions, we ocus on he majo
ade pa ne coun ies o he US and China ha may ha e engaged in oundabou
ade. Mo e speci ically, i s we ob ain yea ly expo and impo da a a he HS 6-
digi le el o he 20 coun ies ha a e he op US impo pa ne coun ies as well as
he op Chinese expo pa ne coun ies. These coun ies a e, in alphabe ical o de ,
Belgium, B azil, Canada, F ance, Ge many, India, Indonesia, I aly, Japan, Malaysia,
Mexico, Ne he lands, Philippines, he Republic o Ko ea (hence o h, Ko ea),
Russia, Singapo e, Spain, Thailand, he Uni ed Kingdom, and Vie nam. Then, by
making g aphs o hese coun ies’ impo s om China and expo s o he US, we
choose se en coun ies (Canada, India, Malaysia, Mexico, he Philippines, Ko ea,
and Vie nam) as po en ial bypass ou es o T ump- a ge ed goods. We ob ain
mon hly ade da a pe aining o hese se en coun ies om he Global T ade A las.
The lis o T ump- a ge ed goods is aken om o icial announcemen s by he
O ice o he Uni ed S a es T ade Rep esen a i e (USTR). As shown in Table 1, mo e
han hal o p oduc s a e a ge ed by T ump a i s.
C. Me hodology
As no ed in sec ion 2.1, he unusually apid inc ease in impo s om China and
he simul aneous apid inc ease in expo s o he US o T ump a i goods compa ed
wi h non-T ump a i goods is a sign o oundabou ade. The ollowing is he
es ima ion equa ion we employ o iden i y whe he oundabou ade ook place:
01 2ymjp ymip ymip
ymij yijp mijp ymijp
lnExp lnImp lnImp Roundabou Dummy
ββ β
ααα ε
=++∗
++++
In his equa ion,
, ,, ,ymi j
and
p
ep esen he yea , mon h, impo pa ne ,
expo pa ne , and p oduc , espec i ely. No e ha we es ima e he equa ion
acco ding o each epo e coun y, such as Mexico, Canada, o Vie nam, o
de e mine i he epo e coun y in ques ion appea s o ha e engaged in oundabou
ade o he T ump- a ge ed goods. The co a ia e,
ymip
lnImp
, cap u es he associa ion
be ween he impo alue o he epo e coun y (e.g., Malaysia) o good
p
om
coun y
i
o he co esponding expo alue o he same good
p
. The expec ed sign
is posi i e because when he p oduc ion o good (o indus y)
p
in he epo e
coun y (e.g., Malaysia) is expanded, he expansion b ings abou bo h impo s o
in e media e goods and expo s o p ocessed goods classi ied in he same ca ego y
p
. In o he wo ds, by including his co a ia e, we can con ol o gene al in a-
indus y ade, which is one o he di e ences be ween Iyoha e al. (2024) and his
s udy.
Roundabou Dummy
akes a alue o 1 i impo s a e om China (
i
=China)
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 31
and expo s a e o he US (
j
=US), and
p
deno es T ump a ge ed goods. Thus, he
c oss- e m
ymip
lnImp Roundabou Dummy∗
accoun s o oundabou ade;
α
is he
e m ep esen ing ixed e ec s. We include ull ixed e ec s o iden i y oundabou
ade co ec ly. We es ima e he equa ion wi h ull ixed e ec s as abo e o he
pe iod o Janua y 2016 o June 2019, which su icien ly co e s be o e and a e he
T ump a i shock. Ou o he selec ed coun ies men ioned abo e, we especially
ocus on Canada, Mexico, and ce ain Asian coun ies. Canada and Mexico we e
chosen because hey a e bo h included in he Uni ed S a es-Mexico-Canada
Ag eemen and ha e no impo du ies and hus a e po en ial s opo e places o
oundabou ade. The Asian coun ies selec ed he e a e also po en ial s opo e
places owing o hei p oximi y o China and o hei la ge and egula expo lows
o he US. To cla i y ou iden i ica ion s a egy wi h ega d o he es ima ion equa ion
abo e, a ske ch o he iden i ica ion s a egy is shown in Figu e A1, and a ske ch o
he da a s uc u e is shown in Figu e A2 in he appendix. To add ess po en ial
endogenei y u he , es ima ions using lagged explana o y a iables we e conduc ed.
III. Desc ip i e analyses
Figu e 1 shows Canada’s impo s om China and expo s o he US o non-
T ump- a ge ed goods ( he le panel) and T ump- a ge ed goods ( he igh panel). I
oundabou ade had been aking place h ough Canada, he impo alues om
China and he expo alues o he US o he T ump- a ge ed goods should ha e bo h
picked up om a ound Augus –No embe 2018, when he T ump a i s kicked in.
Meanwhile, he expo and impo alues o non-T ump- a ge ed goods should no
ha e inc eased as much as he T ump- a ge ed goods. A casual obse a ion o he
igu es does no sugges he p esence o oundabou ade h ough Canada.
FIGURE 1. CANADA’S IMPORTS FROM CHINA AND EXPORTS TO THE US OF NON-TRUMP-TARGETED
GOODS AND TRUMP-TARGETED GOODS
Sou ce: Au ho ’s elabo a ion om he ade da a.
32 KDI Jou nal o Economic Policy AUGUST 2024
Figu e 2 p esen s he case o Vie nam. Bo h impo s om China and expo s o
he US inc eased s eadily o e he sample pe iod. Howe e , i is no clea i he
inc ease is la ge o T ump- a ge ed goods han non-T ump- a ge ed goods. Figu e
3 is he case o Malaysia. T ump- a ge ed goods appea o ha e inc eased bo h
impo s om China and expo s o he US compa ed o non-T ump- a ge ed goods,
bu i is no clea . We ha e d awn he igu es o all coun ies in ques ion and ha e
no ound a clea sign o oundabou ade.3
FIGURE 2. VIETNAM’S IMPORTS FROM CHINA AND EXPORTS TO THE US OF NON-TRUMP-TARGETED
GOODS AND TRUMP-TARGETED GOODS
Sou ce: Au ho ’s elabo a ion om ade da a.
FIGURE 3: MALAYSIA’S IMPORTS FROM CHINA AND EXPORTS TO THE US OF NON-TRUMP-TARGETED
GOODS AND TRUMP-TARGETED GOODS
Sou ce: Au ho ’s elabo a ion om ade da a.
3Due o space limi a ions he e, he igu es o he o he coun ies a e no shown bu a e a ailable on eques .
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 39
The es ima ion esul s wi h he lagged dependen a iable a e shown in Table 8. Mexico shows some signs o oundabou ade, bu
no such signs we e ound o he o he coun ies.
TABLE 8—ESTIMATION RESULTS OF ROUNDABOUT TRADE, LAGGED EXPLANATORY VARIABLES, LAGGED EXPLANATORY VARIABLES,
EXTENDED PERIOD OF JANUARY 2016–AUGUST/SEPTEMBER 2023
Va iables (1)
Canada
(2)
Indonesia
(3)
Malaysia
(4)
Mexico
(5)
Singapo e
(6)
Ko ea
(7)
Thailand
(8)
Vie Nam
(9)
India
(10)
In_imp_ al_11
0.00121***
(0.000305)
0.000160
(0.000377)
0.00269***
(0.000343)
0.00175***
(0.000305)
0.00425***
(0.000223)
0.000988***
(0.000220)
0.00213***
(0.000234)
0.000801**
(0.000260)
0.00234***
(0.000269)
0.000963
(0.000707)
oundabou (de ou )
-0.000513
(0.000643)
-0.00210
(0.00246)
-0.00225
(0.00169)
0.00302**
(0.000987)
0.00136
(0.00199)
0.00135
(0.00120)
0.00304
(0.00172)
0.00417
(0.00236)
-0.000606
(0.00135)
-0.00636
(0.00337)
Mon h
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*mon h*Impo e dummy
*
Expo e dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Obse a ions
20,921,748 11,750,770 13,918,666 20,954,094 28,573,562 27,763,360 31,700,846 21,521,132 24,581,119 3,483,215
R
-squa ed 0.877 0.869 0.892 0.891 0.883 0.888 0.881 0.892 0.842 0.869
Robus s anda d e o s in pa en heses.
***p<0.001,** p<0.01, * p<0.05.
Sou ce: Au ho 's es ima ion using he ade da a.
40 KDI Jou nal o Economic Policy AUGUST 2024
VI. Ano he es ima ion model as a obus ness check
As a obus ness check, I es ima e he ollowing es ima ion equa ion. In his equa ion, I exclude impo s om he explana o y a iables.
01ymjp ymij yijp mijp ymijp
lnExp Roundabou Dummy
ββ α α α ε
= +∗ + + + +
These es ima ion esul s a e shown in Table 9. As in he ea lie es ima ion analyses, Vie nam shows some signs o oundabou ade.
TABLE 9—ESTIMATION RESULTS OF ROUNDABOUT TRADE, EXTENDED PERIOD OF JANUARY 2016–AUGUST/SEPTEMBER 2023,
EXCLUDING IMPORT VALUES FROM THE EXPLANATORY VARIABLES
Va iables (1)
Canada
(2)
Indonesia
(3)
Malaysia
(4)
Mexico
(5)
Singapo e
(6)
Ko ea
(7)
Thailand
(8)
Vie Nam
(9)
India
(10)
Philippines
oundabou (de ou )
-0.000964
(0.00962)
-0.0326
(0.0347)
-0.0273
(0.0242)
0.0201
(0.0154)
0.00639
(0.0282)
-0.00707
(0.0187)
0.0233
(0.0252)
0.0740*
(0.0300)
-0.0141
(0.0197)
-0.0950*
(0.0449)
Mon h
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*mon h*Impo e dummy
*
Expo e dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Obse a ions
29,733,641 17,111,492 20,113,226 28,466,069 38,308,678 36,835,355 42,851,383 29,603,811 34,885,217 5,436,975
R
-squa ed 0.866 0.859 0.884 0.877 0.872 0.881 0.870 0.883 0.831 0.857
Robus s anda d e o s in pa en heses.
***p<0.001, ** p<0.01, * p<0.05.
Sou ce: Au ho 's es ima ion using he ade da a.
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 41
VII. Es ima ion o dubious p oduc ca ego ies
I es ima e he same model o he dubious p oduc ca ego ies shown in Table 2, wi h he esul s shown in Table 10. The e a e no signs
o oundabou ade in his case.
TABLE 10—ESTIMATION RESULTS OF ROUNDABOUT TRADE, JANUARY 2016–AUGUST/SEPTEMBER 2023, FOR THE DUBIOUS PRODUCT CATEGORIES
Va iables (1)
Canada
(2)
Indonesia
(3)
Malaysia
(4)
Mexico
(5)
Singapo e
(6)
Ko ea
(7)
Thailand
(8)
Vie Nam
(9)
India
(10)
Philippines
In_imp_ al
0.000402
(0.000694)
0.00136
(0.00271)
0.00419***
(0.000698)
-0.00406
(0.00313)
0.00362***
(0.000831)
0.000386
(0.000530)
0.00232***
(0.000571)
0.00131*
(0.000572)
0.000648
(0.000603)
-0.000616
(0.00239)
de ou
-0.00110
(0.00176)
0.0540
(0.0318)
0.00158
(0.00332)
0.00106
(0.0121)
-0.0161
(0.0118)
-0.00125
(0.00340)
0.00915
(0.00487)
0.00685
(0.00482)
-0.00560
(0.00401)
0.0224
(0.0130)
Mon h
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*Impo e dummy*Expo e dummy
*
P oduc dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Yea
*mon h*Impo e dummy
*
Expo e dummy ixed e ec ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Obse a ions
4,974,631 305,491 3,612,156 274,647 1,999,790 5,122,192 5,377,603 4,605,108 5,221,874 414,326
R
-squa ed 0.828 0.857 0.909 0.916 0.882 0.855 0.865 0.897 0.805 0.859
Robus s anda d e o s in pa en heses.
*** p<0.001, **p<0.01, * p<0.05.
Sou ce: Au ho 's es ima ion using he ade da a.
42 KDI Jou nal o Economic Policy AUGUST 2024
VIII. Conclusion
Al hough he e a e many news a icles abou a i dodging by e- ou ing made-
in-China goods h ough hi d coun ies and elabeling hem as made in Mexico o
made in Vie nam, he e ha e been no scien i ic s udies o his issue. This pape
p o ides ha d e idence pe aining o whe he such p ac ices a e aking place. The
analyses o he da a up o 2019, he yea be o e he COVID-19 shock, show li le
e idence o oundabou ade. Wi h he ex ended da ase up o 2023, while o e all
he e is li le sign o oundabou ade, he e a e some sligh signs o oundabou
ade o Mexico and Vie nam. The policy ele ance o his s udy is subs an ial
because he T ump a i s a e one o he la ges shocks o he pas 20–30 yea s in
in e na ional ade and hus had a signi ican impac on he wo ld economy. Ou o
he many e ec s o he T ump a i s, a i dodging is one o he impo an issues
equi ing cla i ica ion.
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 43
APPENDIX
FIGURE A1. SKETCH OF THE IDENTIFICATION STRATEGY
Sou ce: Au ho .
44 KDI Jou nal o Economic Policy AUGUST 2024
Es ima ion equa ion
01 2ymjp ymip ymip ymij yijp mijp ymijp
lnExp lnImp lnImp Roundabou Dummy
ββ β α α α ε
=+ + ∗ ++++
yea mon h epo e HS
T ump
Ta i
T ump
E ec i e
impo _pa ne imp_ al Expo _pa ne exp al
ExpUSA_
ImpCHN_dummyc
Roundabou
dummy
2016
1
MYS
111111
0
0
CHN
10
USA
10
1
0
2016
1
MYS
111111
0
0
JPN
20
USA
10
0
0
2016
1
MYS
111111
0
0
CHN
10
CHN
30
0
0
2016
1
MYS
111111
0
0
CHN
10
CAN
20
0
0
2016 1 MYS 111111 0 0 JPN 20 CAN 20 0 0
2016
1
MYS
111111
0
0
JPN
20
JPN
10
1
0
2016
1
MYS
111112
1
0
CHN
10
USA
10
1
0
2016
1
MYS
111112
1
0
JPN
20
USA
10
0
0
2016
1
MYS
111112
1
0
CHN
10
CHN
40
0
0
2016 1 MYS 111112 1 0 CHN 10 CAN 20 0 0
2016
1
MYS
111112
1
0
JPN
20
CAN
20
0
0
2016
1
MYS
111112
1
0
JPN
20
JPN
30
0
0
2019
1
MYS
111112
1
1
CHN
10
USA
10
1
1
2019
1
MYS
111112
1
1
JPN
20
USA
10
0
0
2019
1
MYS
111112
1
1
CHN
10
CHN
20
0
0
2019
1
MYS
111112
1
1
CHN
10
CAN
20
0
0
2019
1
MYS
111112
1
1
JPN
20
CAN
20
0
0
2019
1
MYS
111112
1
1
JPN
20
JPN
10
0
0
T ump Ta i = 1 i HS code is T ump a i goods.
T umpE ec i e = 1 i T ump Ta i = 1 & yea mon h is a e he e ec i e mon h o T ump a i s, i.e., Augus , o Sep embe 2018.
Roundabou dummy = 1 when ExpUSA_ImpCHN_dummy = 1 & T umpE ec i e =1.
FIGURE A2. DATA STRUCTURE
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 45
F om he ade s a is ics, I cons uc ed all combina ions o expo pa ne s and
impo pa ne s o each HS code. The i s line shows ha he epo e coun y (MYS
(Malaysia)) impo ed US$10 million o HS 111111 goods om China and expo ed
US$10 million o he same HS 111111 goods o he US. The T umpTa i dummy akes
a alue o 1 i he good is on he T ump a i lis (i espec i e o he pa ne coun y).
In he example, HS 111112 is on he T ump a i lis ; hus, he T umpTa i dummy
akes a alue o 1. T umpE ec i e akes a alue o 1 i he good is on he T ump a i
lis and he yea and mon h a e a e he ime when he T ump a i became e ec i e.
The ExpUSA_ImpCHN_dummy akes a alue o 1 i he expo pa ne is he US and
he impo pa ne is China. The Roundabou dummy akes a alue o 1 i bo h he
ExpUSA_ImpCHN_dummy and T umpE ec i e a e 1. Wi h his da a s uc u e and
he abo e es ima ion equa ion,
2ymip
lnImp Roundabou Dummy
β
∗
picks up he
oundabou ade.
Appendix o he h ee condi ions in sec ion 3
Condi ion 1: Inc ease in bo h he expo alue o he US and he impo alue om
China by mo e han o equal o US$1 million
Condi ion 2: The gap be ween inc eases in expo alue o he US and impo alue
om China is wi hin 20%.*
Condi ion 3: Bo h impo s and expo s mo e han doubled.**
Impo s om China Expo s o US Gap Cons ain s
Impo s
be o e
Impo s
a e
Inc ease o
dec ease G ow h(X) Expo s
be o e
Expo s
a e
Inc ease o
dec ease G ow h(Y) US inc ease/
China inc ease
Condi ion
1
Condi ion
2
Condi ion
3
10 110 100 10 30 130 100 3.33333333 1=100/100 ○ ○ ○
1000 1100 100 0.1 3000 3100 100 0.03333333 1=100/100 ○ ○ -
** : 0.8 < Y/X < 1.2
** : G ow h > 1 (Bo h China and US)
46 KDI Jou nal o Economic Policy AUGUST 2024
TABLE A1—DUBIOUS CASES OF ROUNDABOUT TRADE WITH BROADER CRITERIA
hs2 Repo e
Canada India
Indonesia
Malaysia
Mexico
Philippines
Singapo e
Ko ea Thailand
Vie Nam
To al
3 1 0 0 0 0 0 0 1 0 0 2
8 0 0 0 0 0 0 0 0 1 0 1
16 0 0 0 0 0 0 0 0 1 0 1
17 0 1 0 0 0 0 0 0 0 0 1
19 0 0 0 0 0 1 1 0 0 0 2
20 0 0 0 0 0 0 0 1 0 0 1
21 0 0 0 0 0 1 0 1 0 0 2
22 0 0 0 0 0 0 0 1 0 0 1
25 1 0 0 0 0 0 0 0 0 0 1
28 1 3 0 0 0 0 0 1 0 0 5
29 2 4 0 0 0 0 0 3 0 0 9
32 0 1 1 0 0 0 0 0 0 0 2
33 0 0 0 0 0 0 0 0 0 1 1
34 0 0 0 1 0 0 1 0 0 0 2
37 0 0 0 0 0 0 1 0 0 0 1
38 1 1 2 1 0 0 0 0 0 0 5
39 1 3 0 2 2 0 3 7 2 2 22
40 1 4 1 1 0 0 0 0 0 0 7
42 0 0 2 0 0 1 0 1 0 0 4
44 0 2 0 3 0 1 0 0 2 0 8
48 1 1 0 1 1 0 0 0 0 0 4
54 0 0 0 1 0 0 0 0 0 0 1
56 0 0 0 1 1 0 0 1 0 0 3
60 1 0 0 0 0 0 0 0 0 0 1
68 1 0 0 0 1 0 0 1 0 0 3
69 2 0 0 0 0 0 0 0 0 0 2
70 1 2 0 0 0 0 0 0 0 0 3
73 1 1 0 0 0 1 1 1 5 0 10
74 0 3 0 0 0 0 0 1 1 0 5
75 0 1 0 0 0 0 1 0 0 0 2
76 0 1 0 0 0 0 0 0 0 0 1
82 0 1 0 0 0 0 0 2 0 0 3
83 1 0 0 0 0 0 1 0 1 0 3
84 4 9 1 2 4 1 5 6 4 1 37
85 1 6 3 6 0 0 4 2 2 2 26
86 0 1 0 0 0 0 1 0 0 0 2
87 0 0 1 0 0 1 1 0 2 0 5
90 0 0 0 1 1 2 1 2 1 1 9
94 0 1 1 0 0 2 0 1 0 1 6
To al 21 46 12 20 10 11 21 33 22 8 204
Sou ce: Au ho 's elabo a ion om he ade da a.
VOL. 46 NO. 3 T ump Ta i s and Roundabou T ade 47
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